The agency downgraded Nigeria’s long-term foreign-currency and local-currency issuer ratings as well as its foreign currency senior unsecured debt ratings and changed the outlook to stable. According to Moody’s, the latest rating action concluded the review for downgrade initiated on 21 October 2022.
This is even against the backdrop that outstanding Ways and Means facilities from the CBN to the Government are deemed to have exceeded statutory limits. With respect to this, President Buhari had earlier in December 2022 placed a request before the Legislature to securitize the outstanding CBN loans. But, the House of Reps, while approving the new loan suspended the request to securitize the N22.7 trillion Ways and Means facilities “pending more details from the Executive.
This situation has not appreciably abated; rather it has sent some ominous signals to the global community. In this regard, Moody’s only gave Nigeria a forlorn hope. According to the rating agency: “While a new administration could reinvigorate the reform impetus in Nigeria after the general election planned for February 25, 2023, and thereby support fiscal consolidation, implementation will likely remain lengthy amid marked social and institutional constraints.
The report argued that the crude oil production outlook as well as the securitisation of huge past advances from the Central Bank of Nigeria remains uncertain. “In particular, the securitisation would bring a degree of fiscal relief but its lawfulness is being contested by the Legislature and its passage is uncertain.